SoFi Allows Users to Purchase IPOs Directly

April 4, 2021
Kevin Larkin

For anyone investing in the New York Stock Exchange, SoFi has made a recent announcement that may act well in your benefit. For those unaware, SoFi is an American financial services company that aids customers in services such as paying back student loans, mortgages, credit cards, and investing. On April 2nd, 2021, SoFi announced that they will now allow users to directly invest in IPOs through their service, which is exciting news to many as this opportunity is usually reserved just for institutional investors. This announcement actually comes one day after stock investing app and service Robinhood made a similar announcement; that they will be allowing users to invest in and buy IPOs, including their own. This option on SoFi will be available for customers who have at least €2,551 (or $3,000) in their account across all of SoFi Invest. This announcement has also been seen as a win for retail investors, since shares usually trade for much higher when they first debut, which is commonly referred to as first day-pop, as Wall Street and wealthy investors are usually given first dibs. This hopefully will generate more business for the company and lead to their expansion past the US, because as of right now they are only a US based firm.

This trend will hopefully expand to other companies delegating access to the purchasing of IPOs in foreign stock exchanges too, such as the London Stock Exchange. This is at least some good news to help the American economy recover after the devastating blow it took during the COVID-19 pandemic, and the lost trust many investors now have in the stock market. Especially since the GameStop Robinhood situation at the beginning of the year, where many average investors pulled together to purchase GameStop stock in massive quantities effectively raising the price tenfold, causing many wealthy Wall Street investors who were shorting the stock to lose tons of money seemingly overnight. Now that Robinhood has announced that it will be filing for its own IPO, as well as allowing people to purchase others on their platform, it will be interesting to see if people are willing to give them another chance after they halted the purchase of GameStop stock to “prevent market manipulation”, which came across as them just trying to protect Wall Street investors from losing any more money. Or will these same people choose a different service such as SoFi to purchase stocks once they are ready to start investing again? Only time will tell, but as of right now it appears that more people have faith in SoFi going forward than Robinhood.

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